Correlation Between Apple and Airbus SE

Can any of the company-specific risk be diversified away by investing in both Apple and Airbus SE at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Apple and Airbus SE into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Apple Inc and Airbus SE, you can compare the effects of market volatilities on Apple and Airbus SE and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Apple with a short position of Airbus SE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Apple and Airbus SE.

Diversification Opportunities for Apple and Airbus SE

0.87

Correlation Coefficient

Apple  Airbus SE

Very poor diversification

The 3 months correlation between Apple and Airbus is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Apple Inc and Airbus SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Airbus SE and Apple is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Apple Inc are associated (or correlated) with Airbus SE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Airbus SE has no effect on the direction of Apple i.e., Apple and Airbus SE go up and down completely randomly.

Pair Corralation between Apple and Airbus SE

Assuming the 90 days trading horizon Apple is expected to generate 4.18 times less return on investment than Airbus SE. But when comparing it to its historical volatility, Apple Inc is 1.04 times less risky than Airbus SE. It trades about 0.02 of its potential returns per unit of risk. Airbus SE is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  3,900  in Airbus SE on October 10, 2024 and sell it today you would earn a total of  60.00  from holding Airbus SE or generate 1.54% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	94.44%
Values	Daily Returns

Apple Inc  vs.  Airbus SE

Apple Inc

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Apple Inc are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady fundamental indicators, Apple may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Airbus SE

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Airbus SE are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile technical and fundamental indicators, Airbus SE exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Apple and Airbus SE

The main advantage of trading using opposite Apple and Airbus SE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Apple position performs unexpectedly, Airbus SE can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Airbus SE will offset losses from the drop in Airbus SE's long position.

The idea behind Apple Inc and Airbus SE pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

Check out your portfolio center.

Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.